The love-in over LinkedIn has charged up expectations for more hot IPOs but didn't manage to shake the broader market out of its doldrums.
LinkedIn started its first day of trading Thursday amid much hype for the first social networking company to go public. Its stock price more than doubled, jumping $49 to $94.30, while the Dow had a hard time holding onto a 45 point gain. The Dow finished at 12,605 and the S&P was up 2 at 1343.
"It's a stupid, crazy valuation," said one trader, who took profits in the stock.
Friday's markets have no economic reports to latch onto. But the tug-of-war between investors who see stocks falling from an economic slowdown and those who see the stock market as one of the more buoyant asset classes may continue to play out in choppy sideways trading.
Thursday's mixed economic data sent buyers into bonds and shaved some early stock market gains. The 10-year was yielding 3.173 percent, above the week's lows and a signal to some bond traders that the recent drop in yields may have found a bottom.
LinkedIn, meanwhile, points to a divide within the tech sector, where a social networking internet stock becomes an instant darling and some of the mainstream tech names, like Hewlett-Packard andIntel are disappointing. Goldman Sachs Thursday issued a sell on Intel and lowered its view of the semiconductor industry to cautious.
Marc Pado, U.S. market strategist and technical analyst at Cantor Fitzgerald, saw the interest in LinkedIn as a positive. "It shows an appetite for risk...I wouldn't run out and buy the stock today, up 100 percent from its IPO price, but considering the market is in a pull back and we're going into summer doldrums, this was a little bit of excitement."
"Everybody knows the stocks is probably going to pull back, but you're seeing some buying and that's good, and you're also seeing interest in the newer side of technology even after HP and Dell said PC sales are slowing. People might take that as the consumer is weakening but really the consumer is shifting to smaller new technologies where Hewlett and Dell are behind," he said.
Pado expects the market to continue to pull back until late June, but he does not expect a major sell off because the market recently confirmed its highs. "You don't look for a super big move when you've got confirmed new highs," he said.
"It's positive to see a rotation rather than an exodus. Money is not leaving the market it's just shifting," he said, noting the recent gains by defensive sectors as investors moved into utilities and other safer plays.
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